Latest / Bloomberg Intelligence / SRG's Flickinger: More Trouble Ahead in Athletic Retail (Audio)

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SRG's Flickinger: More Trouble Ahead in Athletic Retail (Audio) · Bloomberg Intelligence

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  Speaker 1: Traded Sweez, while under Armour fell as much as six
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  Speaker 1: point three percent after cutting its net revenue outlook live
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  Speaker 1: in the first Breaking news desk on Bill Maloney, Charlotte,
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  Speaker 1: all right, hey, thank you very much, Bill Maloney. We've
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  Speaker 1: news over your Bloomberg type squawk sq you a w
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  Speaker 1: Bloomberg business flash. This is taking stock with Kathleen Hayes
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  Speaker 1: and Pim Fox on Bloomberg Radio. The bankruptcy of a
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  Speaker 1: retailer words authority is not only affecting that company, it's
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  Speaker 1: reverberating throughout the market for footwear and other kinds of
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  Speaker 1: athletic apparel. Because today under Armour cut its annual forecast,
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  Speaker 1: signing the demise of one of its largest customers. And
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  Speaker 1: now Nike was downgraded by Morgan Stanley and Bank of
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  Speaker 1: America Merrill Lynch. So the troubles are piling on. We
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  Speaker 1: see those stocks lower today, Nike downpoint four at about
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  Speaker 1: fifty four dollars in ninety eight cents a share, with
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  Speaker 1: under Armour losing three point seven percent, trading at thirty
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  Speaker 1: six dollars and change. So what's next. Bert Flickinger joins
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  Speaker 1: us now he's managing director at Strategic Resource Group here
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  Speaker 1: in New York City. Uh. Were you anticipating something like
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  Speaker 1: this for the likes of under Armour and Nike? Definitely, Kathleen,
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  Speaker 1: because the profit margins and the prices are too high,
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  Speaker 1: that demands too low, and it goes far beyond the
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  Speaker 1: bankruptcy sports authority. So is sports authorities bankruptcy and under
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  Speaker 1: Armor cutting it's annual forecast. Actually that happened day yesterday.
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  Speaker 1: Citing the bankruptcy of sports authorities. That just an excuse
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  Speaker 1: on under ours part. It's an excuse. It's retail reality,
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  Speaker 1: but it's it's also Uh, there's a real issue in
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  Speaker 1: terms of lack of breakthrough marketing. If you if you
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  Speaker 1: look at the history of the big sports brands, when
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  Speaker 1: you had Jim Mullen and Paul Silverman doing breakthrough advertising
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  Speaker 1: for Reebok, Dan Widen Wide and Kennedy working with Liz
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  Speaker 1: Dolan and Joe McCarthy and Phil Knight doing the same
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  Speaker 1: for Nike and i Q and Jay doing the same
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  Speaker 1: thing for a converse. That created a lot of excitement,
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  Speaker 1: And now that excitement is there because the agencies are
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  Speaker 1: really struggling to create consumer demand. And with all the
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  Speaker 1: scandals and sports UH, fewer, fewer people are watching sports
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  Speaker 1: UH and unfortunately more people are eating UH and playing
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  Speaker 1: with their mobile devices than participate hating in sports. And
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  Speaker 1: when less sports participation comes less demand for under Armour, Nike,
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  Speaker 1: and the category dominant sports retailers starting with a sports
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  Speaker 1: authority Eastern Mountain Sports and Sports ul A, which Bloomberg's
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  Speaker 1: All reported a filed for bankruptcy during the last fifty days.
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  Speaker 1: Steph Curry has had a terrific series so far, going
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  Speaker 1: into the NBA Finals the playoffs. That was that was
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  Speaker 1: quite a move for the Warriors versus the Oklahoma City Thunder.
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  Speaker 1: But you say he can't really save companies like under
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  Speaker 1: Armour and Nike amid other stars scandals. Uh, Steph can't
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  Speaker 1: do it by himself. He's tremendous young man on a
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  Speaker 1: three sixty degree basis, just a superb person personally and professionally.
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  Speaker 1: But on the other hand, UH, Nike's had scandals with
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  Speaker 1: Johnny no NFL football Man's Elmanni Pack, Michael Vick, Oscar Victorious,
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  Speaker 1: Ray Kao, Rice John Jones of the US see Maria
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  Speaker 1: Sherpo in tennis, so Tiger Woods and golf. Uh So
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  Speaker 1: it's almost in syriantum the number of scandals, and then
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  Speaker 1: the team scandals with the Russian athletes. It's turning people
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  Speaker 1: off for the Brazil Summer Olympics this summer. UH their
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  Speaker 1: scandals associated with the World Cup and football or what
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  Speaker 1: the US is called soccer UH and and its result,
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  Speaker 1: you're you're you're seeing less interest, particularly amongst millennials, and
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  Speaker 1: millennials are key to driving the future foundation for brands
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  Speaker 1: like under Armours, Well it's Nike. And the less key
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  Speaker 1: footnote is UH that Phil Knights almost like the UH
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  Speaker 1: sports marketing reincarnation of Genghis Khan. He's laid waste to
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  Speaker 1: every competitor from Converse to Umbro to Rebok and to
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  Speaker 1: some extent Audi DA's and there's very little for Nike
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  Speaker 1: and under Armour it's still conquer so with the climbing demand,
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  Speaker 1: it's tough to get accelerating growth. Both companies still have
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  Speaker 1: some growth, but it's not the double digit growth that
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  Speaker 1: people had come to expect from both the market leaders.
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  Speaker 1: But you see also this is part of the retail
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  Speaker 1: ice age. It seems we've got two forces. The retail
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  Speaker 1: ice age would you say will be done by But
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  Speaker 1: then you're also talking about millennials not being into sports
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  Speaker 1: as much and and not not participating as much because
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  Speaker 1: of surprises me because I've got a millennial in my house.
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  Speaker 1: She grew up playing a lot of sports. But where
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  Speaker 1: does this leave these these big companies then, like under
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  Speaker 1: Armour and Nike, which force predominates. And studies have been
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  Speaker 1: published that millennials check their checks or her mobile devices
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  Speaker 1: a hundred plus times a day to check on Facebook
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  Speaker 1: and other digital social connective media. So while that's going on, UH,
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  Speaker 1: fewer people are outdoors also with the cutbacks and public
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  Speaker 1: funding and uh, community college and high school and and
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  Speaker 1: can I jump in really quick at leisure, everybody sneakers
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  Speaker 1: and they update them all the time. Stylish sneakers. That's
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  Speaker 1: a big thing for millennials. Stylish sneakers are completely correct
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  Speaker 1: athlete uh color colors are real breakthrough. That's that's why
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  Speaker 1: Sketchers is done so spectacularly well in recent years. And
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  Speaker 1: UT Cornell Institute for Fashion and Fiber Innovation, they're they're
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  Speaker 1: working with Sketcher's, Nike, uh Umbro, Umbro and others. So
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  Speaker 1: innovation and color will will drive demand. But overall the
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  Speaker 1: trends are softening, and that's somewhat concerning. Bird Flickinger, Managing
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  Speaker 1: director is Strategic Resource Group talking about Nike and under
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  Speaker 1: Armer stocks getting hit by the Sports Authority bankruptcy. This
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